What Are Perpetual Futures? A Beginner’s Guide

Perpetual futures — often called “perps” — are a way to trade on the price of an asset, including cryptocurrencies, without actually buying it. If you think Bitcoin is going to rise, you can open a position that profits when it does. If you think it will fall, you can open a position that profits from the decline. No crypto ever changes hands.

Two things set perpetual futures apart from simply buying crypto. First, they let traders use leverage — borrowing to control a larger position than their collateral alone would allow, which magnifies both profits and losses. Second, they never expire. A position can stay open for as long as there is enough collateral behind it.

This guide explains how perpetual futures work, how they compare to spot trading and traditional futures, what leverage and margin mean in practice, and what happens when a trade goes wrong. Kalshi became the first company in US history to offer CFTC-regulated perpetual futures on May 29, 2026. You can trade crypto currencies such as Bitcoin, Ethereum, Solana, XRP, and more on Kalshi today.

^{For informational purposes only. Not trading advice.}

A perpetual future is a derivative contract that lets you take a position on the price of a crypto asset — without owning it and without an expiration date. If you think the price of Bitcoin is going up, you go long. If you think it's going down, you go short. Unlike a traditional futures contract, which locks you into a set price on a specific date, a perpetual future has no end date. You hold it for as long as you want and close it when you're ready.

Say Bitcoin is trading at $100,000 on the spot market. You believe the price is going to rise, so you open a long position on a Bitcoin perpetual future at $100,000 using $10,000 of collateral and 2x leverage — giving you $20,000 of exposure.

Over the next week, Bitcoin rises to $110,000 — a 10% move. Your $20,000 position is now worth $22,000, giving you a $2,000 profit on your $10,000 collateral. Had you simply bought $10,000 of Bitcoin on the spot market, you would have made $1,000. The leverage amplified your gain.

But leverage cuts both ways. If Bitcoin had fallen to $90,000 instead, your position would be worth $18,000 — a $2,000 loss on your $10,000 collateral. If the price drops far enough to wipe out your collateral entirely, your position is liquidated.

Crucially, you could hold that position for a day, a month, or a year — there is no expiry forcing you to close. The only ongoing cost is the funding rate: a small periodic payment between longs and shorts that keeps the perpetual contract price from drifting too far from Bitcoin’s actual spot price.

Spot trading means buying and owning the actual asset. If you buy Bitcoin on the spot market, you hold real Bitcoin. There is no leverage, no risk of forced closure, and no ongoing cost. Your position lasts as long as you want to hold it.

Perpetual futures work differently. You are not buying the asset — you are entering a contract that tracks its price. This means you can profit from both rising and falling prices, use leverage to amplify your exposure, and hold the position indefinitely. But it also means you face ongoing funding costs and the risk of liquidation if the market moves against you.

Opening a perpetual futures trade comes down to three decisions:

A long position profits when the asset price goes up. You open a long if you think, for example, that Bitcoin is going to rise in value.

A short position profits when the asset price goes down. You open a short if you think the price will fall. This is something you cannot do with spot trading — you can only profit from a price decline using derivatives like perpetual futures.

To open a position, you deposit collateral, also called margin. This is the money that backs your trade. Leverage determines how much exposure your collateral controls.

For example: at 5x leverage, $1,000 in margin controls a $5,000 position. A 10% move in the asset price produces a 50% move in your collateral — in either direction. Higher leverage means larger potential gains and larger potential losses from the same price move.

There are two ways margin can be allocated. With isolated margin, only the collateral assigned to a specific trade is at risk. If that trade is liquidated, the rest of your account is untouched in most cases, though extreme market conditions can cause losses to exceed the collateral in that position.

With cross margin, your entire account balance backs all open positions, which gives more cushion but means one bad trade can draw down your entire balance before liquidation occurs."

Two order types help control outcomes. A stop loss automatically closes your position if the price moves too far against you, limiting how much you can lose. A take profit automatically closes it when the price hits your target, locking in gains. Without these, a leveraged position can lose value faster than expected in volatile markets.

Because perpetual futures never expire, there is no settlement date to naturally keep the contract price aligned with the underlying asset’s spot price. The funding rate is the mechanism that does this.

Think of it this way: if a Bitcoin perp is trading at $101,000 but Bitcoin’s actual spot price is $100,000, the perp is overpriced. Too many traders are going long and pushing the contract price up. To correct this, longs pay a small fee to shorts every eight hours. This makes holding a long position slightly more expensive, which discourages longs and brings the price back down toward $100,000.

The reverse works the same way. If the perp is trading below spot, shorts pay longs, which encourages buying and pushes the price back up.

On Kalshi, the funding rate is charged every eight hours and is visible in your transaction history. During periods of strong market sentiment in one direction, funding rates can compound into a significant cost — a week of holding at elevated rates can cost several percent of notional value in funding alone, separate from any price movement.

Liquidation is what happens when your losses eat through your collateral past a minimum threshold called the maintenance margin. At that point, the platform automatically closes your position to prevent your balance from going negative.

The higher your leverage, the smaller the price move required to trigger liquidation. At 10x leverage, roughly a 10% adverse move is enough. At 50x leverage, roughly a 2% move.

Liquidation is calculated against the mark price — an aggregated reference price drawn from multiple spot markets, designed to resist short-term manipulation and prevent unfair liquidations during brief price spikes.

In isolated margin mode, liquidation losses are limited to the collateral assigned to that specific trade — the rest of your account is not affected. In cross margin mode, the platform can draw on your entire account balance before liquidating.

You deposit $200 as collateral and open a long Bitcoin position at 5x leverage. That $200 controls $1,000 of exposure, with Bitcoin priced at $50,000.

The pattern: at 5x leverage, every 1% move in Bitcoin produces a 5% move in your collateral. Leverage doesn’t change the market, it changes how much of your money is at stake for any given move.

Kalshi offers both perpetual futures and prediction markets. They are different products built for different purposes.

With a perpetual future, you are making a leveraged directional bet on the price of an asset — Bitcoin rising or falling — with no forced expiry. With a prediction market, you are trading the probability of a specific event happening, and the contract resolves definitively when the event does or does not occur. Both products are available on Kalshi, fully regulated by the CFTC.

As of June 3, 2026, Kalshi currently offers 13 CFTC-approved perpetual futures contracts across major cryptocurrencies:

Each contract involves leverage, a funding rate charged every eight hours, and the risk of liquidation if your collateral is wiped out. All contracts are available to US traders under CFTC oversight. Agricultural commodity perpetuals are not part of the product lineup.

Perpetual futures have been available offshore for years — platforms operating outside the US have offered them to non-US traders since BitMEX launched the first Bitcoin perp in 2016. Offshore perpetual futures volume grew from $28 trillion in 2023 to over $90 trillion in 2025. But US traders and institutions were largely shut out, forced to use offshore venues or go without.

Kalshi’s CFTC-regulated perpetual futures change that. By bringing perps onshore under US regulatory oversight, Kalshi gives American traders access to the same instrument that has dominated global crypto derivatives — with the protections of a regulated exchange, transparent funding rates, and no need to navigate offshore platforms.

Kalshi also continues to operate its prediction markets business alongside perpetual futures — making it the only exchange in the US where you can trade both regulated event contracts and regulated perpetual futures in one place.

Perpetual futures are one of the most widely traded instruments in global finance — and until recently, they were off-limits to US traders. Kalshi’s CFTC-approved perpetual futures change that, bringing regulated, onshore access to a $90 trillion market that has been growing offshore for a decade.

Whether you want to go long on Bitcoin, take a short position on Ethereum, or simply learn how leverage and margin work in practice — perpetual futures on Kalshi offer a new way to trade crypto, with no expiry date and full regulatory oversight.

Perpetual futures are live on Kalshi now. Explore all of our crypto perpetual futures contracts and start trading today.

^{This is not financial advice. Trading on Kalshi involves risk and may not be appropriate for all. Members risk losing their cost to enter any transaction, including fees. You should carefully consider whether trading on Kalshi is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk. Information is provided for convenience only on an "AS IS" basis. Past performance is not necessarily indicative of future results. Kalshi is subject to U.S. regulatory oversight by the CFTC.}